Mississippi Administrative Code
Title 35 - Department of Revenue
Part 3 - Income and Franchise
Subpart 10 - Other Entities and Miscellaneous
Chapter 04 - Allocations by Cooperative Associations
Section 35-3-10-04-102

Mississippi Law does not conform with Section 1381 et seq., I.R.C. with respect to the tax treatment of corporations operating on a cooperative basis. Patronage dividends, based solely on patronage and not stock ownership, actually paid or distributed to a patron by a corporation operating on a cooperative basis may be deducted by such corporation in determining Mississippi taxable income. Patronage dividends which are retained by the corporation in the form of "per-unit retain allocations" and identified on the books of the corporation as "qualified allocation margins" are not deductible by the corporation and must be included as an element of taxable income for Mississippi income tax purposes, regardless of whether or not the patron signs his or her written notice of allocation (as defined in 26 U.S.C. 1388) . Such "per-unit retain allocations," taxable to the corporation, are not taxable to the patron until such allocations are, by vote of the stockholders, actually distributed, in whole or in part, to the patron. Corporations operating on a cooperative basis are not, therefore, treated as "tax-option corporations" under Mississippi Law and no authority for such presently exists.